Question

Diego transfers real estate with an adjusted basis of $648,400 and fair market value of $907,760 to a newly formed corporation in exchange for 100% of the stock. The corporation assumes the liability on the transferred real estate in the amount of $771,596.

Determine Diego's recognized gain on the transfer and the basis for his stock. If amount is zero, enter "0". Diego has a recognized gain on the transfer of $ and a basis of $ for his stock.

Answer 1

123,196

Step-by-step explanation:

Recognized gain

= Liability on transferred real estate - Adjusted basis

= 771,596 - 648,400

= 123,196

Basis = 0